CAD: Potent mix of negatives - Westpac

Richard Franulovich, Research Analyst at Westpac, notes that the USD/CAD continues to trade with a persistent bullish tone, heightened odds of a BoC rate cut and the pullback in energy prices in recent sessions making for a potent mix of CAD negatives.

Key Quotes

“We draw a line in the sand at 1.3500. Until then we continue to think the positives for Canada are heavily underpriced.

A heavy local slate next week including jobs, employment, international trade, PMIs and monthly GDP should confirm that growth momentum is on a solid upswing. Our Canadian data surprise index still has plenty of upside (see across), certainly the bounceback from the Fort McMurray disruptions continues and Trudeau’s fiscal stimulus will soon wash over the economy.

Bottom line, next week’s data should undercut BoC easing risks and send USD/CAD lower.”